Key points

• DraftKings and Flutter Entertainment stocks have gained more than 20% over the past month.

• The gains were fueled by a record quarter for gaming revenue.

• Both of these sports betting stocks have momentum heading into 2025.

The two leading sports betting stocks outperformed the S&P 500 by a wide margin in November. Are there more wins to come?

The two leading sports betting stocks, DraftKings (NASDAQ: DKNG) and Flutter Entertainment (NYSE: FLUT) scored big wins in November, outperforming all the major benchmarks.

DraftKings stock jumped almost 24% in November to over $43 per share, while Flutter, the parent company of FanDuel, soared roughly 19% in the month to $276 per share. Flutter stock also climbed in the first two days in December and is now trading at over $281 per share.

It was one of the best months of the year for these sports betting stocks. DraftKings stock is up roughly 24% year-to-date as of December 3, while Flutter has surged 57% YTD.

Gaming revenue record in Q3

The third quarter saw commercial gaming revenue in the U.S. reach a record $17.71 billion, according to the American Gaming Association. That helped drive both DraftKings and Flutter to strong earnings results.

DraftKings released Q3 earnings on November 7 and they beat estimates. Revenue increased 39% year-over-year to $1.1 billion, while the firm had a net loss of $294 million, or -60 cents per share. On an adjusted basis, DraftKings had a 17 cents per share loss, which topped estimates of a 42 cents per share loss.

Further, its monthly unique payers (MUP) rose 55% to 3.6 million, but its average revenue per MUP fell 10% to $103.

DraftKings did lower its revenue guidance for the full year to a range of $4.85 billion to $4.95 billion, from the previous range of $5.05 billion to $5.25 billion. This is due to the “impact of customer-friendly sport outcomes early in the fourth quarter,” it said in the earnings release. But still, the updated 2024 revenue guidance represents growth of 32% to 35%.

DraftKings also expects $6.2 billion to $6.6 billion in revenue in 2025, which would be a 31% year-over-year increase at the midpoint. Further, the 2025 adjusted EBITDA is anticipated to be $900 million to $1 billion, which would be up significantly from the $240 million to $280 million projected for fiscal 2024.

Flutter raises guidance

Flutter, the parent of FanDuel, also got a lift from its Q3 earnings, which crushed estimates. The firm generated $3.2 billion in revenue, a 27% year-over-year increase. Of that amount, $1.2 billion came from the U.S. a 51% increase. Flutter benefitted from a 16% increase in average monthly players.

It posted a net loss of $114 million, but that was 56% better than the same quarter a year ago. It should be noted that young companies in new industries like this often operate at a net loss in the growth years. The key is that they continue to narrow their losses and move toward profitability.

Flutter also raised its fiscal 2024 revenue and adjusted EBITDA guidance on the strength of its Q3, offsetting headwinds from some “unfavorable sports results in Q4 to date.”

Some “real momentum” anticipated in 2025

It has been somewhat of a lackluster year for sports betting stocks as no states legalized sports betting in 2024, so far.

The one bright spot came in November when Missouri narrowly passed legislation approving it. DraftKings, which is now in 25 states and Washington, D.C., anticipates launching its sportsbook in Missouri when betting begins sometime next year.

Missouri could be one of several states that legalize sports betting or online iGaming in 2025.

On the Craig-Hallum Online Gaming conference call this week, DraftKings CEO Jason Robins told analysts that he is “really excited about the state legislative front” in 2025, according to Casino.org.

“I think this year coming up, 2025, we’re going to get some real momentum potentially even get some iGaming bills over the hump, which should be great,” Robins told analysts, Casino.org reported.

Along with Missouri, Minnesota and Georgia are two states that could legalize sports betting in 2025.

iGaming could also expand. Currently, only seven U.S. states offer iGaming, which is online casino gambling. But eight states proposed iGaming this year, including New York, so the hope is some of these bills become law in 2025 and iGaming is legalized.

Both DraftKings and Flutter are considered consensus buys among analysts. DraftKings has a price target of $52 per share, which would be an 18% increase, while Flutter has a median target of $299 per share, marking a projected 6% gain.

Both of these sports betting stocks have strong momentum and if more states legalize sports betting or iGaming, it will provide even stronger tailwinds.